A draft economic impact analysis of what would happen in Bozeman, Montana if Wal-Mart is allowed to expand its discount store into a supercenter, indicates that Wal-Mart has exaggerated its job claims by a mere 100%. The draft report, which was "prepared for" and paid for by Wal-Mart, was written by Bay Area Economics of Berkeley, CA. According to the BAE study, expanding the existing Wal-Mart from a 125,000 s.f. discount store to a 205,000 s.f. supercenter with grocery, "would decrease" average annual sales at Bozeman's existing supermarkets "to the lower end of the range of industry median benchmarks." "The proposed Wal-Mart expansion will capture a share of these sales," the report warns. BAE says Wal-Mart "is likely to draw addtional grocery shoppers to Bozeman from outside the local trade area, especially those focused on 'panty loading, as existing Wal-Mart customers from its own larger trade area stock up on groceries as well as other items when shopping." The hardest hit stores will be "larger, full service supermarkets and the centers some of them anchor," the study concludes. The consultant predicts that "there will be a net increase in the total number of jobs in supermarkets and general merchandise stores in Bozeman following the proposed Wal-Mart expansion, but a smaller increase overall than the total number of jobs added at Wal-Mart." That's a diplomatic way of saying Wal-Mart has over-estimated its net job impact. If the 53,000 square feet of grocery store is added to the Wal-Mart, BAE says sales at existing grocery stores in Bozeman will drop by 14%. That means an existiing 60,000 s.f. grocery store would lose $3.2 million in sales in its first year. The study suggests that if the Wal-Mart supercenter opened in 2000, it would bring in $17 million in grocery sales, of which $12.5 million would come from existing stores. "Because Wal-Mart serves a larger trade area than Bozeman's supermarkets, it is assumed that it will also capture food sales from a larger area, as its existing customer base will also buy grocery items in the store rather than at supermarkets outside the Bozeman Supermarket Trade Area." In other words, BAE says 75% of Wal-Mart food sales will derive from the existing Bozeman area, 25% from outside Bozeman. But 100% of its sales will come from existing grocery stores, or nearly $17 million in lost sales to existing merchants. In terms of job impacts, the new study says that Wal-Mart claims their supercenter will employ 240 people (159 in the grocery side of the store says BAE). The supercenter, however, would cause existing grocery stores to suffer a net loss of 76 jobs, and general merchandise stores would lose 44 jobs, for a total loss of 120 jobs. "These losses would be offset by an additional 240 jobs at Wal-Mart, for a net increase of 120 jobs," BAE reports. This means that on the surface of it, Wal-Mart has exaggerated its job claims by 100% -- doubling the real net impact it will have on Bozeman. Another example of Wal-Math in action. Other studies have shown that for every one job created at Wal-Mart, 1.5 jobs were lost elsewhere. The BAE study was prepared for Wal-Mart.

What you can do: The BAE study is actually quite generous to Wal-Mart, using sales projections that portray Wal-Mart as less dominant than one might expect.For example, in projecting the general merchandise impact of Wal-Mart, BAE assumed that "sales per square foot assumed to match area general merchandise average". The same assumption was used to measure sales on the grocery side of the Wal-Mart. BAE used $315 as grocery sales per square foot for Wal-Mart, and $228 as the general merchandise sales per square foot. These numbers are very conservative, and have the effect of underestimating the total sales impact of Wal-Mart, which in turn understates the impact of lost sales on other stores. Wal-Mart sales are generally higher per square foot than existing merchants, not the same. But even with these understated figures, the net impact of Wal-Mart is severe enough to cause 120 people to lose their jobs, and make Wal-Mart's job estimate an example of super-exaggeration. Local officials rarely ask for the NET impact of Wal-Mart stores, and local reporters simply reprint Wal-Mart's gross figures without any offsets. (See example below from Foster, PA). For details on the BAE report, contact info@sprawl-busters.com

"Norman has become the guru of
the anti-Wal-Mart movement" ~ 60
Minutes